The bank-nonbank horse race in automated teller machines is nearing a moment of truth.
Sometime in the next few weeks, Electronic Data Systems Corp. will complete its long charge to the top, overtaking BankAmerica Corp. to become the No. 1 deployer of ATMs in the United States.
That day - when another post historically held by a bank passes to the competition - will be fraught with significance.
The race is by no means over. Banks and nonbank companies alike continue to jockey for installation contracts. And financial institutions still own 88% of the installed base of ATMs, according to a recent study by Mentis Corp., Salisbury, Md.
But the trend is unmistakable and probably irreversible.
Nonbanks like EDS and its nearest rival, Affiliated Computer Services Inc., acquired 33% of the new ATMs bought in 1994, and they intend to buy close to half the new ATMs expected to be sold this year, Mentis said.
Consultants say nonbank deployment of ATMs, away from traditional bank premises, simply continues a trend to offer consumers more convenience. Banks themselves started the trend when they began putting together shared networks in the 1970s.
"I don't think banks are concerned about the fact that there are nonbank deployers," said Robert P. Barone, chairman and chief executive officer of the Electronic Funds Transfer Association, Herndon, Va.
EDS has been aggressive in putting ATMs in convenience stores, gas stations, and groceries. In fact, EDS controls half of all ATMs deployed by nonbanks. In 1993, the Plano, Tex.-based company had 1,886 ATMs; by the end of 1994, the total had more than doubled, to 4,300.
EDS this month completed a two-year project of installing nearly 4,000 ATMs in 7-Eleven stores nationwide. That brought EDS' total to more than 5,500, and it adds about 50 per month.
BankAmerica owns and operates a bit more than 5,600 ATMs. It has a contract with Lucky Stores to install ATMs at 400 California supermarkets.
A BankAmerica spokesman declined to divulge its monthly ATM deployment rate, making it hard to predict exactly when EDS will dethrone the San Francisco-based bank holding company.
It's entirely possible the two organizations will seesaw between the No. 1 and No. 2 positions for months to come, depending on deployment schedules and new deals like those with 7-Eleven and Lucky Stores.
The two leaders may not have much competition. The third-largest deployer of ATMs in the United States, Dallas-based Affiliated Computer Services, has 3,400. Citicorp and NationsBank Corp. - each of which has more than 2,000 - round out the top five.
"The numbers are only important in that they mean convenience," said a BankAmerica spokesman. "Convenience is, of course, the really important thing."
BankAmerica has been aggressive in adding functions to its ATMs. Some of the western bank's customers can use ATMs to buy prepaid telephone cards, postage stamps, public transportation passes, or gift certificates to local stores.
For EDS, the 4,000 7-Eleven ATMs were just an opening phase, company officials said.
"The next phase is to transform these terminals from simple cash dispensers to multiproduct distribution devices by introducing value-added consumer services as technology develops," said Neil P. Marcous, executive vice president and general manager in EDS' electronic commerce division, based in Morris Plains, N.J.
EDS is already applying its technology to support the sale of postage stamps, prepaid long distance calling vouchers, and travelers checks. It is also planning this fall to launch an innovative money transfer service that uses ATMs in place of clerks.
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Despite the increasing numbers of installed ATMs in the country, most consumers don't trust them and prefer to do business with a live teller, according to a recent survey.
The survey of 1,000 consumers in five big U.S. cities, which was conducted by America's Research Group, also found that 30% of consumers believe banks would cheat them if they could get away with it.
"Banks need to inspire the highest level of confidence in their services but, instead, seem to have inspired distrust in their quest for reduced operating costs," said Britt Beemer, chairman of the Charleston, S.C.-based consumer research organization.
The survey found that almost half the respondents distrusted ATMs for depositing money. Nearly one-third said they had found errors on their bank statements.
For the survey, which was completed this month, men and women with household incomes of $24,000 or more were interviewed in New York, Seattle, Dallas, Chicago, and Miami.